THIS
CAUSE is before the Court on two motions. On
September 21, 2018, Defendant Barbri, Inc. filed a motion to
dismiss Count III of the Third Amended Complaint (Doc. 36)
pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure
(Rule(s)). See Defendant Barbri, Inc.'s
Dispositive Motion to Dismiss and Memorandum in Support (Doc.
44; Barbri Motion). In addition, on October 22, 2018,
Defendants Infilaw Corporation, Arizona Summit Law School,
LLC (ASLS), Florida Coastal School of Law (FCSL), and
Charlotte School of Law (CSL) (collectively, Infilaw
Defendants) filed a motion to dismiss this action in its
entirety pursuant to Rules 12(b)(1) and 12(b)(6).
See Defendants Infilaw Corporation, Arizona Summit
Law School, LLC, Florida Coastal School of Law, and Charlotte
School of Law, LLC's Omnibus Motion to Dismiss Third
Amended Complaint and Supporting Memorandum of Law (Doc. 56;
Infilaw Motion). Plaintiffs/Relators Paula C. Lorona and Reid
Potter (Relators) filed a response to the Barbri Motion on
October 12, 2018, and to the Infilaw Motion on December 17,
2018. See Plaintiffs' Response to Defendant
Barbri, Inc.'s Dispositive Motion to Dismiss (Doc. 54;
Response to Barbri); Relators' Response to Defendants
Infilaw Corporation, Arizona Summit Law School, LLC, Florida
Coastal School of Law, and Charlotte School of Law, LLC's
Omnibus Motion to Dismiss (Doc. 65; Response to Infilaw). In
addition, with leave of Court, the Infilaw Defendants filed a
reply in support of their Motion on January 17, 2019.
See Reply in Support of Defendants Infilaw
Corporation, Arizona Summit Law School, LLC, Florida Coastal
School of Law, and Charlotte School of Law, LLC's Motion
to Dismiss the Third Amended Complaint (Doc. 71; Reply).
Accordingly, this matter is ripe for review.

I.
Procedural History

Plaintiff/Relator
Paula C. Lorona initiated this action on August 5, 2015, by
filing, under seal, a four-count complaint pursuant to the
False Claims Act, 31 U.S.C. § 3729 et seq.
See Complaint of Qui Tam Plaintiff Paula C. Lorona
Filed Under Seal Pursuant to 31 U.S.C. §§ 3729
et seq. (Doc. 1; Original Complaint). On August 6,
2015, the Court entered an Order (Doc. 5) striking the
Original Complaint as an impermissible shotgun pleading,
observing that “each subsequent count of the four
counts in the Complaint incorporates by reference all of the
allegations of the preceding counts.” See
August 6, 2015 Order at 1-2. In accordance with the
Court's Order, Lorona filed an amended complaint on
August 31, 2015. See First Amended Complaint of Qui
Tam Plaintiff Paula C. Lorona (Doc. 8; Amended Complaint).
Thereafter, on March 10, 2016, with leave of Court, Lorona
filed a second amended complaint, joining the additional
Plaintiff/Relator Reid Potter, and adding a fifth count.
See Second Amended Complaint of Qui Tam Plaintiffs
Paula C. Lorona and Reid Potter (Doc. 14; Second Amended
Complaint); see also Order (Doc. 13) (granting leave
to amend).

Following
multiple extensions of time, on February 16, 2018, the United
States filed a notice of its decision not to intervene in
this action. See United States' Notice of
Election to Decline Intervention (Doc. 30). Accordingly, on
April 24, 2018, the Magistrate Judge entered an In Camera
Order directing the Clerk of the Court to unseal the
pleadings in this matter. See In Camera Order (Doc
33.). Upon review of the Second Amended Complaint, the Court
found that Relators had once again employed a shotgun manner
of pleading. See Order (Doc. 35) at 1-2, filed April
26, 2018 (“Given the lack of any specification,
Plaintiffs appear to be invoking all factual allegations as
well as all allegations of each of the proceeding counts and
leaving it to the Court to sift out irrelevancies and decide
for itself which facts are relevant to the particular causes
of action asserted.”). As such, the Court struck the
Second Amended Complaint and directed Relators to file a
third amended complaint. See id. at 3. The Court
cautioned Relators to “carefully review the Eleventh
Circuit authority on this issue and ensure that the third
amended complaint is fully compliant with the letter and
spirit of the shotgun pleading rule.” See id.
at 3 n.1. On May 18, 2018, Relators filed the Third Amended
Complaint of Qui Tam Plaintiffs Paula C. Lorona and Reid
Potter (Doc. 36; Third Amended Complaint), [1] the operative
pleading in this action.

Defendants
ASLS, CSL, and FCSL (the Law Schools) are private, for-profit
law schools, controlled by their parent company, Defendant
Infilaw. See TAC ¶¶ 4-10. Relators allege
that the Infilaw Defendants violated the False Claims Act
(FCA) in connection with their receipt of federal funds from
the student financial assistance programs authorized by Title
IV of the Higher Education Act of 1965 (HEA). To be eligible
to receive Title IV funds, institutions such as ASLS, CSL,
and FCSL must enter a program participation agreement (PPA)
with the Secretary of the Department of Education (DOE) which
conditions “the initial and continued
participation” of the institution on its compliance
with certain requirements. See 34 C.F.R. §
668.14(a)(1). By entering a PPA, an institution agrees in
pertinent part that:

It will comply with all statutory provisions of or applicable
to Title IV of the HEA, all applicable regulatory provisions
prescribed under that statutory authority, and all applicable
special arrangements, agreements, and limitations entered
into under the authority of statutes applicable to Title IV
of the HEA, including the requirement that the institution
will use funds it receives under any Title IV, HEA program
and any interest or other earnings thereon, solely for the
purposes specified in and in accordance with that program.

34 C.F.R. § 668.14(b)(1). Relators allege that the Law
Schools executed PPAs and submitted them to the federal
government “despite full knowledge” that the
regulations and requirements were “regularly being
violated . . . .” TAC ¶¶ 32-34. Specifically,
Relators allege that the Law Schools were violating the
following three DOE regulations: (1) the “90/10
Rule” set forth in § 668.14(b)(16), [3] (2) the
prohibition on “substantial misrepresentations”
set forth in § 668.71(b), [4] and (3) the accreditation
requirement set forth in § 668.14(b)(23).[5] In light of
these violations, Relators maintain that the submission of
the falsely certified PPAs “caused the federal
government to distribute Title IV/HEA funds” to the Law
Schools, “in violation of the False Claims Act.”
Id. ¶¶ 33-34. Relators also allege that
the Law Schools made false statements to the American Bar
Association (ABA) essential to the Law Schools'
accreditation, which caused the government to pay Title IV
funds to the Law Schools for which the Law Schools were
ineligible. See id. ¶¶ 203-05, 212-13,
222, 224.

In the
Third Amended Complaint, Relators set forth five separate
claims under the False Claims Act. In Counts I, II and IV,
Relators assert that the Law Schools knowingly presented
false claims for payment to the federal government in
violation of § 3729(a)(1)(A), and knowingly made or used
false records or statements material to the false claims in
violation of § 3729(a)(1)(B). See TAC
¶¶ 206-28, 239-45. In Count III, Relators allege
that the Law Schools and Infilaw, conspired with Defendant
Barbri, a corporation which provides “preparation
courses and materials for individuals taking state bar exams,
” to violate the FCA. See TAC ¶¶ 12,
229-38. Last, in Count V, Relators allege that the Law
Schools and Infilaw knowingly avoided their obligation to
transmit money to the federal government, in violation of 31
U.S.C. § 3729(a)(1)(G), by failing to return to the
federal government the “millions of dollars in payments
for claims they were not entitled to.” See TAC
¶¶ 247-49.

B.
The Relators

Lorona
enrolled at ASLS as an evening student in August 2009.
Id. ¶ 136. Lorona also “decided to work
at ASLS because it would help her attend law school.”
Id. ¶ 25. ASLS hired Lorona in November of 2009
as “an administrative assistant to the General Counsel
of ASLS.” See TAC ¶ 22. In 2010, she was
promoted to “financial aid representative, ” and
in 2011, she received promotions to “assistant director
of financial aid, ” and “student
accounts/accounting manager.” Id. As an
employee, “Lorona was given a full tuition waiver and a
pro rata early tuition waiver to attend ASLS.”
Id. ¶ 25. “Lorona's responsibilities
as an employee of ASLS included submission of requests for
federal funds, through the Common Origination and
Disbursement System (COD), used by the DOE to create,
deliver, and report Federal Pell Grants, TEACH Grants, and
Federal Direct Loans.” Id. ¶ 23.
Following Lorona's submission of a COD request, the DOE
would disburse the Title IV funds to ASLS, and Lorona would
facilitate the distribution of the funds to the students.
Id. ¶ 24. According to Relators, Lorona also
“observed and participated in ASLS'[s] application
for accreditation from the American Bar Association and the
financial inner-workings of ASLS and Infilaw, including
student loan disbursement, the application for and receipt of
Title IV funds, and the certification of compliance with all
DOE and Title IV regulations and requirements.”
Id. ¶ 23. Lorona alleges that ASLS President
Scott Thompson executed the PPAs, “but they were
prepared by other employees within the President's Office
and financial aid department, ” such that she had
“unparalleled access to the documents and the process
under which they were certified.” Id. ¶
32.[6] However, Lorona does not describe this
process or describe her role, if any, in the preparation of
the PPAs.

Potter
attended law school at ASLS as well. Id. ¶ 26.
Following his graduation, ASLS hired Potter in 2011, where he
worked in the Academic Services department until September of
2014. Id. Potter's job at ASLS involved
“guiding students through their bar exam preparation,
” as well as collecting bar exam preparation fees.
Id. ¶¶ 27, 29. Potter also attended
“meetings with ASLS and Infilaw officials regarding
academic success programs, ” including ASLS's bar
exam preparation programs, and the “use of those
programs to secure and maintain federal funds . . . .”
Id. ¶ 28. Potter was also involved in
“discussions with representatives of Infilaw, ASLS and
Barbri” regarding the check exchange program described
below, and its alleged purpose as a means “to disguise
funds ASLS received from federal student loan programs so
that ASLS could continue to receive such funds.”
Id. ¶ 29.

C.
The 90/10 Rule

An
institution's participation in most Title IV student
financial assistance programs[7]is conditioned on its
entry into a PPA with the Secretary of the DOE. By entering a
PPA, an institution agrees to comply with numerous statutory
and regulatory rules and requirements. See 34 C.F.R.
§ 668.14(b). One such regulation is known as the
“90/10 Rule” which demands as follows: “For
a proprietary institution, [8] the institution will derive at
least 10 percent of its revenue for each fiscal year from
sources other than Title IV, HEA program funds, as provided
in § 668.28(a) and (b), or be subject to sanctions
described in § 668.28(c).” See 34 C.F.R.
§ 668.14(b)(16). Pursuant to § 668.28(c),
“[i]f an institution does not derive at least 10
percent of its revenue from sources other than Title IV, HEA
program funds-(1) For two consecutive fiscal years, it loses
its eligibility to participate in the Title IV, HEA programs
for at least two fiscal years.”

According
to Relators, “[i]n or about early 2010, Defendants
became concerned that they would not satisfy the 90/10 Rule
because a large proportion of the students attending ASLS,
FCSL, and CSL were receiving substantial Title IV/HEA funding
through loans.” See TAC ¶ 39. Relators
allege that in 2009-2010, both ASLS and FCSL reported that
over 82% of their revenue came from Title IV/HEA funding.
Id. ¶ 40. Public data shows that in the
2012-2013 funding year, all three Law Schools reported over
86% of their revenue from Title IV/HEA sources. Id.
¶ 41. And, for the 2013-2014 funding year, both ASLS and
CSL reported revenue from Title IV/HEA sources in excess of
87%, while FCSL's reported Title IV/HEA revenue had
declined to just under 85%. Id. ¶ 42. Relators
allege that, to address this “90/10 Problem, ”
the Law Schools manipulated their revenue streams in the
following three ways: 1) offering institutional loans, 2)
creating internal bar preparation programs, and 3) engaging
in a “check exchange” with Barbri.

1.
Institutional Loans

Lorona
asserts that she participated in weekly meetings from 2010
through 2013, where representatives and employees of the Law
Schools and Infilaw discussed “how to create the
appearance that Defendants were complying with the 90/10
Rule.” See TAC ¶ 44. In 2011, Scott
Thompson, the ASLS President and former Chief Financial
Officer of Infilaw, proposed “the concept of offering
Institutional Loans (‘ILs') to students as a
solution to the 90/10 Rule.” Id. ¶ 45.
According to Lorona, “Thompson stated that from
Infilaw's perspective the sole reason to offer ILs was to
give the appearance that the Defendant [Law] Schools were in
compliance with the 90/10 Rule.” Id.

Relators
allege that Infilaw and the Law Schools began offering
institutional loans for the fall 2011-spring 2012 financial
aid year. Id. ¶ 48. Although the Law Schools,
under Infilaw's direction, initially solicited only
students with top credit scores to sign up for institutional
loans, once those efforts were exhausted, the Law Schools
began offering institutional loans “to almost any
student without regard to creditworthiness or ability to
repay, including students with bankruptcies and
foreclosures.” Id. ¶¶ 48-50. By
virtue of her position at ASLS, Lorona asserts that she has
knowledge of the mechanics of the institutional loan program
as she was “instructed to complete the financial
transactions necessary to fund” institutional loans.
Id. ¶ 57. As set forth in the Third Amended
Complaint,

Once a student was convinced to sign up for an [institutional
loan], the Defendant [Law] Schools would ‘refund'
the Title IV/HEA funds previously received from DOE and
replace those loan funds with [institutional loan] funds from
the institution, most of which was previously received Title
IV/HEA funds from other students' financial aid
submissions. This allowed the Defendant [Law] Schools to
transfer funds from the 90% side to the 10% side in a
dollar-for-dollar manner, making it appear they were
complying with the 90/10 Rule.

Id. ¶ 57. Nonetheless, Relators do not allege
any particular examples of students who received such loans,
the repayment terms of the loans, or the number of such loans
each Law School issued.

(i) For loans made to students and credited in full to the
students' accounts at the institution on or after July 1,
2008 and prior to July 1, 2012, include as revenue the net
present value of the loans made to students during the fiscal
year, as calculated under paragraph (b) of this section, if
the loans-

(A) Are bona fide as evidenced by standalone repayment
agreements between the students and the institution that are
enforceable promissory notes;

(B) Are issued at intervals related to the institution's
enrollment periods;

(C) Are subject to regular loan repayments and collections by
the institution; and

(D) Are separate from the enrollment contracts signed by the
students.

(ii) For loans made to students before July 1, 2008, include
as revenue only the amounts of payments made on those loans
that the institution received during the fiscal year.

(iii) For loans made to students on or after July 1, 2012,
include as revenue only the amount of payments made on those
loans that the institution received during the fiscal year.

34 C.F.R. § 668.28(a)(5). Nonetheless, Relators contend
that the Law Schools could not properly count the receivables
from these institutional loans as non-Title IV income because
the loans were not “subject to regular loan repayments
and collections by” the Law Schools as required to
constitute non-Title IV revenue under the regulation.
See TAC ¶¶ 46, 51-55; see also 34
C.F.R. § 668.28(a)(5)(i)(C). According to Relators, the
Law Schools and Infilaw knew that the institutional loans
extended to low-credit students were uncollectible and never
“made any serious attempts to collect” on those
loans. See TAC ¶¶ 52-54. Indeed, Relators
assert that “Defendants” knew that “most of
the students receiving [institutional loans] could not and
would not repay the loans, ” and that
“Defendants” purposefully did not attempt to
collect these loans “in order to avoid calling
attention to the fact that the loans were not in fact
collectible . . . .” Id. ¶ 53. Based on
“information and belief, ” Relators allege that
“certain students” never made any payments on
their institutional loans. Id. ¶ 54. Lorona
maintains that Thompson “forced” her to allow
these students to continue attending school so the
receivables would count as non-Title IV money. Id.
Based on “information and belief, ” Relators
allege that the institutional loan default rate in the 2013
fiscal reporting year (presumably, at ASLS, although it is
unclear) exceeded 40%. Id.[9]

According
to Relators, “[a]fter a year of funding”
institutional loans to low-credit students, the Law Schools
reported the “amount of the corresponding
receivables” to the DOE as non-Title IV income.
Id. ¶ 51. Relators do not allege the amount of
the institutional loan receivables reported to the DOE or
more precisely, the amount of such receivables derived from
loans to low-credit students that were not actually subject
to repayment and collections. Indeed, Relators do not allege
any information about the Title IV and non-Title IV
revenues reported to the DOE for the 2011-2012 fiscal year.
Id. ¶¶ 40-42. Instead, Relators allege
that Lorona viewed non-public, “internal calculations
of revenue” related to the 90/10 Rule, “most of
which” showed that ASLS was “consistently in
violation of the 90/10 Rule.” Id. ¶ 58.
The dates and details of these internal calculations are not
alleged, and Relators offer only their “information and
belief” that these same documents exist at CSL and
FCSL. Id. In addition, an unidentified person at an
unidentified time is alleged to have provided Lorona with
unidentified documents “demonstrating a violation of
the 90/10 Rule, ” of unspecified date and magnitude,
and instructed her to “convert some Title IV/HEA loans
into [institutional loans] for the sole purpose of converting
revenue to create the appearance of compliance with the 90/10
Rule.” Id. ¶ 58. Whether or how Lorona
accomplished this conversion is not alleged. It is unclear
from the allegations whether the Law Schools' practice of
providing institutional loans to low-credit students
continued after the first year. Id. ¶ 60.
Notably, for loans issued after July 1, 2012, only the
payments actually received by the institution may be counted
as revenue. See 34 C.F.R. § 668.28(a)(5)(iii).
Relators do not allege any specific facts showing a violation
of this provision.

2.
The myBAR Program

On
approximately September 15, 2011, the Dean of ASLS, Shirley
Mays, sent an email stating that after “an insightful
90/10 meeting, ” the development of an internal bar
exam preparation course “‘has bubbled to the top
as a real solution for 90/10.'' TAC ¶ 61.
According to Relators, Infilaw tasked the Law Schools,
beginning with ASLS, “with creating and implementing
their own bar exam preparation programs to compete with
established programs from Barbri and other providers.”
Id. ASLS then instructed the Director of the
Critical Legal Skills Program (DCLSP) to implement a bar
preparation program. Id. ¶ 62. The DCLSP was
not receptive to the idea of creating and implementing a new
program in less than three months, sufficient to prepare
December 2011 graduates for a February 2012 bar exam.
Id. ¶ 62. Nonetheless, Dean Mays insisted that
ASLS pursue implementation of its own bar preparation course,
and at some point ASLS “formalized its new
program” named “myBAR, ” for
“Multi-Year Bar Advanced Review.” Id.
¶¶ 63, 66. Relators allege on “information
and belief” that the Law Schools “counted myBAR
program fees as non-Title IV/HEA revenue toward satisfying
the 90/10 Rule.” Id. ¶ 68.

In late
2011, Dean Mays informed the DCLSP that the $50, 000 fund
previously offered to students in need of financial
assistance to enroll in established bar preparation courses
was no longer available. Id. ¶ 64. An Infilaw
employee, Penny Willrich, suggested that ASLS “force
its students to take its bar preparation program, provide no
bar preparation materials to the students unless they sign up
for ASLS bar preparation program, and even charge students
parking fees during the bar preparation program to count
toward non-Title IV/HEA funds.” Id. ¶ 65.
Relators do not allege when those suggestions were made, to
whom they were made, whether they were ever implemented, or
how much, if any, revenue they generated. However, Relators
go on to allege that at an unspecified time, in unspecified
amounts, ASLS began “paying students who participated
in myBAR thousands of dollars as ‘bonuses' for
completing mini-courses called modules, thus effectively
refunding the students' myBAR fees.” Id.
¶ 67. According to Relators, this arrangement
“allowed ASLS to claim tuition received from myBAR fees
as non-Title IV/HEA revenue, while hiding the fact that the
revenue was refunded Title IV/HEA funds.”
Id.[10]

Pursuant
to 34 C.F.R. § 668.28(a)(3), institutions may only
consider funds generated from certain sources as non-Title IV
revenue.[11] As relevant here, §
668.28(a)(3)(iii) permits an institution to count funds
“paid by a student, or on behalf of a student by a
party other than the institution” for an
“education or training program” that
“prepares students to take an examination for an
industry-recognized credential or certification issued by an
independent third party . . . .” Relators contend that
the Law Schools could not properly count the income from the
myBAR program as non-Title IV revenue because it is not
income “from school activities necessary and required
for students enrolled in their programs, nor do the programs
actually prepare their students properly to take an
examination for an industry-recognized credential or
certification issued by an independent third party.”
TAC ¶ 70. Indeed, according to Relators, the myBAR
program was “woefully inadequate as a bar preparation
course . . . .” Id. ¶ 69. In support,
Relators assert that in an email dated December 23, 2014,
“ASLS admitted . . . that the anticipated bar passage
rate for an ASLS student on the February 2015 bar exam was
47% compared to a state average of 70%.” Id.
¶ 69. Relators further allege that for the July 2015
Arizona bar exam the “actual pass rate for ASLS
graduates” was 26.4%. Id. ¶ 75. Notably,
in a separate section of the Third Amended Complaint,
Relators state that 63.8% of ASLS graduates taking the bar
exam in February 2012 (including repeat and first-time
takers) passed the exam. Id. ¶ 159. In July of
2012, 73.1% of ASLS graduates passed the bar exam, and 72.9%
of its graduates passed in February 2013. Id. While
ASLS's bar passage rates do drastically decline in
subsequent years, Relators provide no allegations linking
this decline to the myBAR program. Indeed, there are no
allegations regarding what percentage of ASLS students who
enrolled in the myBAR program passed the bar exam as compared
to students who utilized other programs. Moreover, Relators
offer no information allowing one to assess the caliber of
the internal bar exam preparation programs at CSL or FCSL.

3.
The Check Exchange

Barbri
“provides preparation courses and materials for
individuals taking state bar exams, most of whom are recent
law school graduates.” Id. ¶ 12. These
courses “include a series of live or recorded lectures,
study materials, and practice exams, ” and much of the
cost is “attributable to Barbri's copyrighted bar
preparation books, outlines, and practice exams, which are
tailored to each state's bar exam.” Id.
¶ 77. On July 2, 2012, Infilaw and Barbri entered into
an agreement whereby Infilaw paid $12 million to have Barbri
provide all the materials for the Law Schools' internal
bar review programs over a three-year term, from July 2,
2012, until July 31, 2015. Id. ¶ 84. Pursuant
to the agreement, Barbri stopped offering its own courses at
the Law Schools, and was prohibited from soliciting students,
setting up recruiting tables, or offering discounts to
students at the Law Schools. Id. ¶¶ 81-82.
This agreement “fixed the price of the ‘live'
bar preparation courses offered to . . . students, eliminated
any competition by Barbri, and resulted in large payments
from Infilaw to Barbri to ensure that the Defendant [Law]
Schools' in-house bar review courses were the only option
available to the Infilaw students.” Id. ¶
88. According to Relators, all three Law Schools implemented
internal bar preparation programs utilizing the
“written materials and lectures developed by Barbri for
their bar exam preparation courses.” Id.
¶ 79. Although touted as an attempt to increase bar
passage rates, Relators allege that the reason Infilaw
created these internal bar preparation programs was “to
inflate the portion of revenue at the Law Schools that could
be counted as non-Title IV or ‘10' revenue.”
Id. ¶ 89.

Significantly,
Barbri typically begins soliciting students to sign up for
its courses during their first year of law school.
Id. ¶ 76. To enroll, students pay a deposit to
Barbri to lock-in a lower price “as the cost increases
each year a student waits to pay the deposit.”
Id. Thus, at the time Barbri and Infilaw entered
their agreement, students taking the bar review course in the
summer of 2012 had “already paid or contracted directly
with Barbri to take Barbri's bar review course and the
Barbri course was already half over.” Id.
¶ 86. Nevertheless, Infilaw, the Law Schools and Barbri
required “students who had already paid deposits and
contracted with Barbri [to] switch their enrollment to the
Infilaw bar preparation programs for the July 2012 through
July 2013 bar exams.” Id. ¶ 90. In
addition, Infilaw, the Law Schools, and Barbri devised a
“check exchange” program so that Infilaw and the
Law Schools could immediately recognize the full amount of
these funds as non-Title IV revenue. Id.
¶¶ 90-92. Relators describe this program as
follows: “Barbri agreed to refund each student's
past payments by sending the checks directly to the
Defendant [Law] Schools. The Defendant [Law] Schools would
then distribute the checks to the students in exchange for
the student writing a personal check payable to the school
for the same amount.” Id. ¶ 91. Students
who had already made payments to Barbri for the summer 2012
course, or submitted deposits for future courses, were
required to engage in this “check exchange”
program. Id. Indeed, Barbri sent refund checks to
ASLS for the check exchange even for students preparing for
the July 2012 bar exam, who had already paid Barbri, attended
Barbri classes, and had nearly completed the Barbri program.
Id. ¶ 92. As such, despite having never
provided any services for the money, ASLS was able to count
these funds as non-Title IV revenue. Id. ¶ 92.
Specifically, Relators allege that “[f]or the summer
2012 bar review course, ASLS received checks for
approximately 70 graduates representing approximately $184,
000. This was income that was owed and had already been paid
to Barbri based on the students' agreements with
Barbri.” Id. ¶ 110. According to
Relators, ASLS “illegally counted a large and material
amount of this money as non-Title IV income in its 2012
annual audit submitted to the DOE.” Id.

According
to Relators, ASLS also sought to engage in a check exchange
with students after the summer 2013 bar exam, when the
students had already completed the preparation course and bar
exam. Id. ¶ 112. “ASLS contacted these
students, attempted to make them cash a ‘refund'
check from Barbri, and then immediately write a check in the
same amount to ASLS for its myBAR program.”
Id. If a student refused to comply, ASLS would
threaten to withhold their character and fitness
certification necessary for bar admission. Id.
Relators allege that Barbri sent refund checks for
“approximately 63 former students to ASLS and ASLS was
successful in convincing many of these students to
participate in the check exchange process.”
Id. The Relators do not allege the amount of funds
generated from these efforts but assert that the income
generated was “reported by Infilaw as non-Title IV
revenue on its 2013 annual audit submitted to the DOE.”
Id.

Potter
asserts that he participated in “multiple conversations
with representatives of CSL and FCSL, ” in which he was
told that the check exchange program was designed to address
“ASLS's 90/10 problem.” Id. ¶
93. Potter also received an email from ASLS President
Thompson explaining that the funds from the check exchange
needed to be deposited by July 31st for the 90/10
calculation. Id. ¶ 94. In spring of 2013,
Thompson sent several emails stating his concerns about the
status of collections for the internal bar review program and
emphasizing that these funds were a “‘very
important piece of 10 money.'” See id.
¶¶ 122-125. Potter alleges that he was present
“during discussions with Barbri employees where this
purpose (and its potential illegality) was discussed.”
Id. ¶¶ 96-97. For example, Barbri employee
Mary Goza sent an email to ASLS employees on January 18, 2013
explaining the check exchange process and including
instructions on how to “ensure compliance with 90/10 .
. . .” Id. ¶ 108.

Indeed,
in order to ensure that the funds received for the internal
bar preparation program would be counted as non-Title IV
revenue, ASLS would not allow students to pay their myBAR
fees prior to graduation. Id. ¶¶ 99-105.
ASLS either refused to accept a deposit for the myBAR program
entirely, id. ¶¶ 99-104, or accepted a
deposit but refunded the money upon graduation and then
required the student to pay the fee in full after graduation,
id. ¶ 105. It appears ASLS also waited to
engage in the check exchange process until after the targeted
students had graduated. Id. ¶ 107. Relators
allege that the Infilaw Defendants pressured students in a
variety of ways to participate in the check exchange program.
Id. ¶¶ 113-14, 119-21, 125. According to
Relators, the check exchange program was an “illegal
price fixing and anti-competitive arrangement, ” which
operated to the detriment of the students. Id.
¶ 126.[12]

D.
Substantial Misrepresentations

By
entering into a PPA, institutions also agree to comply with
the regulatory prohibition on substantial misrepresentations
set forth in 34 C.F.R. § 668.71. Pursuant to this
regulation, the Secretary of the DOE may initiate proceedings
to fine an institution or limit, suspend or terminate the
institution's participation in a Title IV, HEA program if
the Secretary determines that the institution has engaged in
substantial misrepresentation. See 34 C.F.R. §
668.71(a)(4). According to the regulation, “[a]n
eligible institution is deemed to have engaged in a
substantial misrepresentation when the institution . . .
makes a substantial misrepresentation about the nature of its
educational program, its financial charges, or the
employability of its graduates.” Id. §
668.71(b). Such misrepresentations “are prohibited in
all forms, including those made in any advertising,
promotional materials, or in the marketing or sale of courses
of programs of instruction offered by the institution.”
Id. A misrepresentation includes statements that are
false, erroneous or have “the likelihood or tendency to
mislead under the circumstances.” Id. §
668.71(c). Such a statement is substantial if “the
person to whom it was made could reasonably be expected to
rely, or has reasonably relied, to that person's
detriment” on the statement. Id. Relators
allege that the Law Schools “repeatedly violated this
regulation by publishing materially false and misleading
representations about bar passage, academic, and career
prospects, and pushing unsuspecting students into loans that
could not be repaid.” See TAC ¶ 127.

1.
AAMPLE

Relators
allege that ASLS advertised statistics and data regarding the
caliber of its students that were materially false and
misleading. Specifically, Lorona contends that ASLS failed to
include the LSAT scores and GPAs of students admitted through
an alternative admissions process, known as the Alternative
Admissions Model for Legal Education (AAMPLE), in its
advertised statistics. See TAC ¶¶ 142
-144, 154. Because “[a]dmission and enrollment through
AAMPLE does not require grade point average or LSAT scores
within the range of traditional admissions, ” the
failure to include the admissions data from the AAMPLE
students in the admissions statistics posted on the ASLS
website, in Relators' view, rendered the reported
information materially false and misleading. Id.
¶¶ 143, 154. Relators do not identify the specific
statements that Lorona contends were misleading, nor what the
statistics would have been with the AAMPLE students included.
Lorona also contends that ASLS also knew but failed to
disclose that the percentage of its students likely to pass
the bar exam was declining due to the admission of increasing
numbers of AAMPLE students. Id. ¶¶ 176-77.

2.
The Unlock Potential program

Relators
allege that in May 2014, ASLS, as well as FCSL and CSL, began
paying certain students to defer or forego taking the bar
exam upon graduation based upon the Law Schools'
determination that these students were likely to fail the
exam. Id. ¶ 182. Relators allege that this
“Unlock Potential” program artificially increased
bar passage percentages, thus deceiving the ABA, the DOE, and
the public. Id. ¶¶ 181-83, 190-91.
According to Relators, “[a]t least 39 otherwise
first-time bar exam takers were paid by ASLS to defer the
July 2014 bar exam.” Id. ¶ 184. Indeed,
Lorona herself was approached on February 11, 2015, from a
representative of “ASLS or Infilaw, ” who
informed her that she was not likely to pass the February bar
exam. Id. ¶ 188. The representative offered to
pay Lorona $5, 000, with an additional monthly stipend, to
defer the bar exam until July 2015. Id. ¶ 189.
Relators allege that in later years the Dean of ASLS
contacted students with an offer of $10, 000 to defer sitting
for the bar exam. Id. According to Lorona, the bar
coach assigned to her by ASLS told her that “ASLS is
concerned that it may lose accreditation and access to Title
IV/HEA funding due to drastically low performance
numbers.” Id. ¶ 188. Relators conclude
“upon information and belief” that ASLS counted
the students who participated in the Unlock Potential program
as “full-time employees for purposes of reporting to
the ABA and DOE.” Id. ¶ 187.

3.
Financial Obligations

Relators
further allege that “Defendants misrepresented what
incoming students should expect to pay for their
education.” Id. ¶ 194. Relators assert
that the ASLS website represented that the tuition and fees
for the “JD program during the 2010-11 academic year
was $101, 310.00, ” with an additional $2, 184.00 in
costs for books and supplies. Id. According to
Relators, ASLS also represented that “the median
cumulative program debt for graduates between July 1, 2009
and June 30, 2010 was $93, 142.51 for federal student loan
debt and $5, 000.00 for private student loan debt.”
Id. Relators appear to contend that this information
was misleading because ASLS's “most recent”
disclosures identify the median federal student loan debt as
$187, 792. Id. ¶ 195.[13] Relators allege
that “[d]espite notice provided by Lorona, ASLS
continued its marketing by creating deceptive documents and
statistics designed to increase non-traditional enrollment
and publicly stating the same.” Id. ¶
197. Relators do not identify these documents, or the
particular statements or statistics that were allegedly
misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.
ABA ...

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